Oil prices were on track for a second consecutive weekly decline on Friday, weighed down by expectations of another OPEC+ output hike in July and fresh uncertainty after the latest legal twist kept US President Donald Trump’s tariffs in place.
Brent crude futures slipped 21 cents, or 0.33%, to $63.94 a barrel by 0626 GMT. US West Texas Intermediate crude fell 22 cents, or 0.36%, to $60.72 a barrel. The Brent July futures contract is due to expire on Friday.
Both contracts have fallen 1.3% so far this week, Reuters reported.
The downward trajectory largely stemmed from the prospect of rising supplies as investors priced in another hike by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, when eight of its members meet on Saturday.
“The stage is set for another bumper production increase,” Westpac’s head of commodity and carbon research, Robert Rennie, said in a note, potentially more than the 411,000 barrels-per-day hike decided on at the previous two meetings.
The potential hike comes as the global surplus has widened to 2.2 million bpd, likely necessitating a price adjustment to prompt a supply-side response and restore balance, said JPMorgan analysts in a note.
The analysts expect prices to remain within current ranges before easing into the high $50s by year-end.
In the US, Trump’s tariffs were to remain in effect after a federal appeals court temporarily reinstated them on Thursday, reversing a trade court’s decision on Wednesday to put an immediate block on the most sweeping of the duties.
The block pushed oil prices down more than 1% on Thursday as traders weighed its effects. Analysts said uncertainty would remain as the tariff battles worked through the courts.
Oil prices have lost more than 10% since Trump announced his “Liberation Day” tariffs on April 2.
On the demand front, recession worries fuelled by the tariff war have clouded the outlook. Adding to US-China trade tension, Washington ordered a broad swathe of companies to stop shipping goods, including ethane and butane, to China without a license and revoked licenses already granted to certain suppliers.
Global oil demand improved from the previous week, driven by a rebound in US oil consumption with robust travel over the Memorial Day long weekend, the JPMorgan analysts noted.
Still, the monthly expansion in global oil demand is tracking at approximately 400,000 bpd as of May 28, 250,000 bpd below expectations, the analysts said.
